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September 16,2020

Today Wyoming became the first state to approve a banking charter for digital assets. This will allow those using digital assets, like cryptocurrency, to access reliable financial services, protect consumers, and allow businesses a way to safely hold digital assets.

Why Does It Matter: The cryptocurrency exchange’s decision to apply for the banking charter would reduce its dependence on third-party financial institutions.

The state approval will also allow the company to expand its product and services offering. The company plans to start with Digital Asset Custody services, Demand/Deposit Accounts, and Wire transfer and funding services in the first year of operations.

Over the years, the company also plans to expand in Trust accounting and administration services, services for corporate accounts, online banking and cryptocurrency debit card services for individual accounts with potential ventures into retail, wealth management, and treasury services over time.

What’s Next: As per the state law, since Kraken Financial will offer digital asset custody services, it’s required to hold fiat currency reserves equal to 100% of its deposits. This requirement will ensure that Kraken Financial can process customer’s withdrawal requests on-demand, the company noted.

Crypto’s bank
Kraken Financial, a newly formed division of the popular crypto exchange, has become the first firm to receive a special type of charter making it a bank. On Wednesday, the Wyoming Banking Board approved the exchange’s application for a special purpose depository institution (SPDI) charter – making it a licensed bank in the state, replete with access to federal payments infrastructure and opening the doors to issuing digital-asset debit cards and savings accounts as well as securities and commodities services. Kraken Financial beat out Wyoming blockchain pioneer Caitlin Long’s application for Avanti Financial, and is the first bank established in Wyoming since 2006.

Non-public information
The China state-sponsored Blockchain-Based Service Network (BSN), a standardized internet services provider for decentralized applications (dapp) developers, plans to make 24 public chains available in its network for Chinese users beginning in November. These public chains will look quite different after being “localized” for the Chinese market, CoinDesk’s David Pan reports, who gained access to a leaked memo. Inspired by Ant Financial’s permission blockchain, these chains will replace their native tokens with the renminbi, be renamed after the 24 Chinese solar terms and will be supervised by the Public Permissioned Blockchain consortium – ensuring the state reaps the benefits of blockchain tech’s traceability and efficiency, without the decentralization embraced by public chains like Bitcoin and Ethereum. “BSN strictly follows related laws and regulations and will remove any chain that violates them from the network,” the memo reads. 

How Normies Are Getting Crypto-Rich With DeFi

Sep 17, 2020 at 12:17 UTCUpdated Sep 17, 2020 at 15:30 UTC

DeFi’s current food craze is providing some crypto fans with major returns. (Mick Haupt/Unsplash)Leigh Cuen

Ethereum whales undoubtedly drive the decentralized finance (DeFi) movement, but many people making money on DeFi trends are just regular Joes, so to speak. 

One such trader, who asked to go only by Joe, is a math student at a Canadian university. Just by playing with Ethereum software and his own calculations, he managed to make hundreds of thousands of dollars in 2020. This wasn’t his first rodeo, however; he’s been trading on decentralized exchanges (DEXs) for more than a year.

“I’m not a whale in the crypto world but I’m one of the top users of the DeFi protocol I use,” he said. “Before, when DeFi was smaller, there was a lot less competition.” 

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Since Weird DeFi’s food craze began, Joe said “high yields” are now available to newcomers “without a lot of technical knowledge.” 

It’s impossible to say just how many rookie traders raked in unusually high profits during the YAM debacle in August, when an unaudited crypto experiment garnered $465 million in crypto then imploded within 72 hours. 

Read more: Yearn, YAM and the Rise of Crypto’s ‘Weird DeFi’ Moment

One such anonymous YAM user, who said he rarely trades on exchanges, said he found the YAM trading game fun and relatively easy. He participated in the community vote to “save” YAM, then said he promptly “dumped” his tokens when he realized the software experiment was not sustainable. All things considered, he said he earned $15,000 from participating in YAM, having spent up to $800 on transaction fees. 

For both of the above-mentioned DeFi fans, this is a life-changing amount of money. These users often rely on service providers to access the DeFi ecosystem. As such, traders weren’t the only winners of the Yam gambling game. Companies that run the Ethereum network also accrued traffic and transaction fees during the rise of Yam and SushiCREAM and now Pickle.

“I access farming and do most one-time things with MetaMask,” Joe said. “The only other [service] I use is the Web3 provider Infura.” 

DeFi infrastructure

The DeFi mentality emphasizes open-source access to tools, services with low barriers to entry and distributed teams. Sometimes, this includes low barriers to entry for high-risk games. 

According to Uniswap founder Hayden Adams in June 2020, most of the Uniswap ecosystem relies on ConsenSys infrastructure services, like Infura. This has also proven to be the common pattern for copycat DeFi projects like SushiSwap. ConsenSys spokesperson James Beck said the Ethereum conglomerate restructured to make infrastructure and wallet services, like Infura and the DeFi-friendly wallet MetaMask, pillars of the company’s “core software business.” 

ConsenSys’s head of product for Infura, Michael Godsey, said his team handled the “increased usage” from the food-themed yield farming spike, watching closely to understand “these new usage patterns.” Such DeFi experiments provide inspiration and research data for Ethereum startups, not chagrin. 

Read more: SushiSwap Migration Ushers in Era of ‘Protocol Politicians’

In reference to the DEX tools people use to access these trading games, Godsey added, “Uniswap and MetaMask are two of our amazing customers and many yield farmers are utilizing their platform to participate in this new activity.”

As for Joe, the Canadian college student, he said he plans to keep stacking tokens because the broader DeFi movement is “sustainable and has been growing at a relatively slow pace for years.” 

On the other hand, he said the trends over the past few months were heavily influenced by Compound’s token model. Joe reasoned these DeFi experiments might end in a “big crash” or slow fizzle.   

“As long as risk-adjusted yield is higher than for other opportunities, I will keep using them,” he said.



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